Planning for end-of-life is never a pleasant or easy topic to think about, let alone talk about. However, if we are honest with ourselves, death is a normal part of life.
Planning for how your assets will be distributed after death is critical to financial planning and living a responsible life.
People make unintentional mistakes all the time in estate planning. Some can be easily fixed, while others take additional steps to remedy.
For this reason, understanding the most common mistakes can be helpful for people embarking on this journey. Common mistakes people make, which you should avoid, include:
Thinking you are too young to plan your estate
You can create an estate plan if you have a checking or savings account and begin accumulating assets via a retirement account and investing.
Planning an estate is critical as soon as you are able. After that age, you may purchase homes, vehicles, and other assets you want to protect. Estate planning does just that.
Rushing to choose a personal representative
You should know your personal representative very carefully because this person will have access to everything that was yours.
You must trust them very well because, after all, you are, in some ways, handing over your life to them and trusting that they will respect and honor your wishes, as you have stated.
Forgetting to update your estate plan
Having an estate plan is not a one-time thing you do and leave inside a safe. Every time something material changes, whether having a child or adding assets to your name, you should update your estate plan and beneficiaries accordingly.
Not having a will and power of attorney
It is essential to have a will, a power of attorney and, if you choose to, a trust where you can put your assets. Many tools are available to protect yourself, your assets and your beneficiaries.
These tools are designed to help you and them. Ensuring you have all documentation needed to make swift transfers of assets can make a massive difference for your beneficiaries.
Not discussing taxes as they relate to estate planning with your attorney
Taxes and estate planning are very much intertwined and can work in concert in many ways. Ensure that you know what you can do to minimize tax liability while at the same time paying what the law requires you to pay.
While some of these may seem overwhelming, you will not have to worry about almost anything if you have proper counsel.
Making mistakes when planning your estate can cost you, which is why it is so essential to prevent that from happening by having the foresight to begin your estate planning now.